IDEAS home Printed from
   My bibliography  Save this paper

Determinants of Transport Costs for Inter-regional Trade


  • Se-il Mun


  • Yoko Konishi
  • Yoshihiko Nishiyama
  • Ji-eun Sung


Our paper empirically investigates the structure of transport costs for interregional trade, by using the micro-data of freight charge. We focus on road transport, reflecting the fact that trucking has a dominant share in transporting goods between regions in many countries (in Japan, 91.2% of overall domestic freight volume in 2005). An advantage of our method is that our data represent the costs actually incurred by shippers or carriers, unlike those based on indirect information, or constructed data. Another feature of our paper is to consider the cost structure of each shipment. This is in contrast to many other studies using firm-level data. We present a microeconomic model of inter-regional freight transportation based on careful formulation of cost structure in trucking firm and market equilibrium. We consider that output of transportation service is a bundle of multiple characteristics, such as distance (d), volume (q) and time (t). This is different from the conventional definition of output variable in transportation, i.e., the product of quantity and distance (q*d, according to the above notations). We derive the freight charge equation for empirical analysis based on the market equilibrium, which is derived in a similar manner to the hedonic theory. We use the micro-data from the 2005 Net Freight Flow Census (NFFC), in which information on freight charge and other variables for individual shipment (origin, destination, volume, shipping time) are obtained. The data for other explanatory variables such as distance, toll payment and wage are obtained from various sources. By estimating the parameters of freight charge equation, we investigate the effects of various factors on the level of freight charge. We also examine the existence of scale economies with respect to lot size (weight) and long-haul economies: transport cost per unit weight is decreasing with weight; transport cost per distance is decreasing with distance. Main results are summarized as follows. (1) There are very strong scale economy and long-haul economy: elasticity of freight charge with respect to lot size and distance evaluated around the sample mean are -0.55 and 0.60, respectively. Consequently, the unit freight charges have similar values if the values of q*d are the same. This suggests that the conventional definition of output, ton km, turns out to be a good approximation. (2) Degree of market competition (represented by the number of trucking firms per 1000 population) has significant effect on freight charge: elasticity is 0.09.

Suggested Citation

  • Se-il Mun & Yoko Konishi & Yoshihiko Nishiyama & Ji-eun Sung, 2013. "Determinants of Transport Costs for Inter-regional Trade," ERSA conference papers ersa13p361, European Regional Science Association.
  • Handle: RePEc:wiw:wiwrsa:ersa13p361

    Download full text from publisher

    File URL:
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    1. Pierre-Philippe Combes & Miren Lafourcade, 2005. "Transport costs: measures, determinants, and regional policy implications for France," Journal of Economic Geography, Oxford University Press, vol. 5(3), pages 319-349, June.
    2. Holt, Charles A, Jr, 1979. "Uncertainty and the Bidding for Incentive Contracts," American Economic Review, American Economic Association, vol. 69(4), pages 697-705, September.
    3. Allen, W Bruce & Liu, Dong, 1995. "Service Quality and Motor Carrier Costs: An Empirical Analysis," The Review of Economics and Statistics, MIT Press, vol. 77(3), pages 499-510, August.
    4. Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb..
    Full references (including those not matched with items on IDEAS)


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Tsubota, Kenmei, 2015. "Agglomeration and directional imbalance of freight rates : the role of density economies in the transport sector," IDE Discussion Papers 488, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    2. KONISHI Yoko & Se-il MUN & NISHIYAMA Yoshihiko & Ji Eun SUNG, 2014. "Measuring the Value of Time in Freight Transportation," Discussion papers 14004, Research Institute of Economy, Trade and Industry (RIETI).
    3. Se-il Mun & Yoko Konishi & Yoshihiko Nishiyama & Ji-eun Sung, 2014. "Measuring the value of transport time for inter-regional trade," ERSA conference papers ersa14p410, European Regional Science Association.


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wiw:wiwrsa:ersa13p361. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Gunther Maier). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.